The short answer
The main types of burial insurance are level (full benefit from day one), graded and modified (a reduced benefit for death from illness in the early years), and guaranteed issue (no health questions, usually a two-year waiting period). Your answers to health questions decide which types an insurer will offer you.
Key takeaways
- Burial insurance, final expense insurance and funeral insurance are names for small whole life insurance policies meant to help pay final costs.
- Level policies can pay the full benefit from day one and are offered based on your health answers.
- Graded and modified policies accept more health conditions but limit the payout for death from illness during the first years, often two.
- Guaranteed issue policies ask no health questions, but usually limit the payout for death from illness for about two years.
- Preneed insurance is a different product: it is tied to a funeral contract with one funeral home.
The types of burial insurance at a glance
Burial insurance plans, funeral insurance plans and final expense plans are usually the same product sold under different names: a small whole life insurance policy with a fixed premium that is meant to last for life. What changes from one plan to the next is how the insurer decides to accept you and how the policy pays in the first years.
| Policy type | Health questions? | Waiting period for death from illness | Who it often fits | Who it often does not fit |
|---|---|---|---|---|
| Level (immediate benefit) | Yes | None. Full benefit from day one | People in fair to good health, including many with well-managed conditions | People with recent serious illness the insurer will not accept for level coverage |
| Graded benefit | Yes, with more conditions accepted | Reduced benefit in the early years, often 2; full benefit after | People with some serious health history in recent years | People who qualify for level coverage |
| Modified benefit | Yes, with more conditions accepted | Often a refund of premiums plus stated interest in the early years, often 2; full benefit after | People who do not qualify for level or graded coverage but can answer some questions | People who qualify for level coverage |
| Guaranteed issue | None | Usually about 2 years. Often a refund of premiums plus stated interest during that time | People who cannot qualify for the other types | People who can qualify for level coverage, since guaranteed issue usually costs more for the same benefit |
Insurers do not all use these names the same way. One insurer's "graded" policy may work like another insurer's "modified" policy. Always read the policy's benefit schedule for the first two or three years rather than relying on the label.
Level (immediate) burial insurance
A level policy pays the full death benefit from the first day the policy is in force, for any covered cause. You answer health questions on the application, and the insurer may check prescription records or other databases with your permission.
- Health questions: Yes. Each insurer asks its own questions, often about a set time window such as the past two or three years.
- Waiting period: None.
- Price compared with other types: Usually lower than graded or guaranteed issue for the same benefit.
- Good to know: A "no" from one insurer does not mean every insurer will say no.
For a deeper look, see burial insurance with no waiting period and life insurance with an immediate death benefit.
Graded benefit and modified whole life
Graded benefit whole life and modified whole life are in-between options. The insurer still asks health questions but accepts more conditions than it would for a level policy. In exchange, the policy pays less than the full amount if death from illness happens during the first years.
- A graded policy commonly pays a set portion of the benefit in each early year, then the full benefit later.
- A modified policy commonly returns the premiums paid, often plus a stated amount of interest, if death from illness happens during the early years.
- On many of these policies, accidental death is paid in full from day one.
- After the limited period ends, often two years, the full benefit is paid for any covered cause.
These are common patterns, not rules. The exact early-year payout is written in the policy. See graded death benefit explained for a worked example.
Guaranteed issue life insurance and burial insurance
Guaranteed issue life insurance asks no health questions. If you are within the insurer's age limits, you can generally be accepted. Because the insurer takes everyone who applies, it limits the payout early on.
- Health questions: None.
- Waiting period: Usually about two years for death from illness. During that time, the family commonly gets back the premiums paid, often with stated interest.
- Accidental death: Commonly paid in full from day one.
- Price compared with other types: Usually higher for the same benefit.
- Coverage amounts: Often smaller than level policies offer.
Guaranteed issue burial insurance can be a fit for people with serious health conditions, such as those receiving dialysis or treatment for cancer, who cannot qualify for the other types. It is usually not the right first choice for someone who could qualify for level coverage.
Simplified issue vs. guaranteed issue underwriting
The words simplified issue and guaranteed issue describe how the insurer decides to accept you, not how the policy pays. Level, graded and modified burial insurance policies are often called simplified issue life insurance because acceptance is based on health questions and record checks.
| Simplified issue | Guaranteed issue | |
|---|---|---|
| How you are accepted | Health questions plus record checks | No health questions; acceptance within age limits |
| Can you be turned down? | Yes | Generally no, within the age limits |
| Policy types offered | Level, graded or modified | Usually a graded or limited benefit for about 2 years |
| Price for the same benefit | Usually lower | Usually higher |
Honest answers matter with simplified issue. A policy can generally be challenged during its contestable period, often two years, if the application left out or misstated important facts.
Preneed insurance is a different product
Preneed insurance is also used to pay for a funeral, but it works differently from the types above. It is usually sold through a funeral home and tied to a funeral you plan now with that funeral home. When you die, the policy pays the funeral home for the goods and services in your contract.
| Burial (final expense) insurance | Preneed insurance | |
|---|---|---|
| Who receives the money | The beneficiary you name | Usually the funeral home in your contract |
| How the money can be used | Generally any way the beneficiary chooses | For the funeral goods and services you chose |
| Where it is sold | Through a Licensed Insurance Agent or insurer | Usually through a funeral home |
| If you move | Policy goes with you | Check the contract; changes may be limited |
See also prepaid funeral plans and burial trust funds.
How to tell which type may fit you
- Start by asking about level coverage. If your health answers are accepted, it usually pays in full from day one at a lower price than the other types.
- If a level policy is not offered, ask whether a graded or modified policy is available before moving to guaranteed issue.
- Look at the benefit schedule for years one, two and three, and ask what happens with accidental death.
- Compare more than one insurer, since each asks different health questions.
- Use the free look period after the policy arrives to review it. The length varies by state.
Our policy quiz gives a starting read on which type may fit, and the coverage calculator can help you think about how much coverage to ask about. You can also talk with a Licensed Insurance Agent.
Common questions
What are the types of burial insurance?
The common types are level (full benefit from day one), graded and modified (a reduced benefit for death from illness in the early years), and guaranteed issue (no health questions, usually a two-year waiting period). Preneed insurance is a related but different product that pays a funeral home.
What is the difference between graded and modified whole life?
Both limit the payout for death from illness in the early years, often two. A graded policy commonly pays a set portion of the benefit in those years. A modified policy commonly returns premiums plus stated interest. Insurers use the names differently, so read the benefit schedule in the policy itself.
What is simplified issue life insurance?
Simplified issue life insurance is accepted based on health questions and record checks, such as prescription history, rather than a full health review. Level, graded and modified burial insurance policies are often simplified issue. The insurer can turn down an application or offer a different type based on the answers.
Is guaranteed issue burial insurance worth it?
It can be for someone who cannot qualify for level, graded or modified coverage. It usually costs more for the same benefit and limits the payout for death from illness for about two years. If you might qualify for level coverage, it generally makes sense to ask about that first.
Are funeral insurance plans and final expense plans the same thing?
Usually, yes. Funeral insurance, burial insurance and final expense insurance are names for small whole life insurance policies meant to help pay final costs. A preneed policy sold by a funeral home is different, because it is tied to that funeral home. See what is final expense insurance.
Does every type of burial insurance pay for accidental death right away?
Commonly, yes. Many graded, modified and guaranteed issue policies pay the full benefit for accidental death from day one, and level policies pay the full benefit for any covered cause. Each policy defines "accident" in its own words, so read that section before you buy.
Is burial insurance whole life or term?
Burial insurance is generally whole life insurance. The premium is usually fixed and the coverage is meant to last for life as long as premiums are paid. Term life insurance ends after a set number of years. See burial insurance vs. life insurance.
Which type of burial insurance should I ask about first?
Many people start by asking about level coverage, because it can pay in full from day one and usually costs less for the same benefit. If a level policy is not offered, a graded or modified policy may be the next step, with guaranteed issue after that. A Licensed Insurance Agent can compare insurers for you.